MALAYSIA will slash prices of music and movie discs from January as part of its fight against piracy but the local film and music fraternity warned the move could backfire and kill the industry.
The ceiling price for locally-produced video compact discs (VCDs) will be fixed at 14 ringgit ($5.51), Domestic Trade and Consumer Affairs Minister Muhyiddin Yassin said. Locally-manufactured music compact discs (CDs) of foreign artistes will be priced at 29 ringgit and those of local artistes at 21 ringgit, he said.
The price controls will not affect imported CDs, VCDs or music cassettes, digital video discs (DVDs) or computer software.
"The government has given the best solution to the problem we are facing. I hope all parties will agree to this. A 30 per cent decrease in prices of the CDs and VCDs I think is good," the minister said.
At present, original music discs or DVDs cost between 40 and 80 ringgit apiece while illegal copies, which were readily available on the streets before a recent government crackdown, sold for five to 15 ringgit.
Industry players are being given a three-month grace period to clear existing stock, estimated to be worth 40 million ringgit, Mr Muhyiddin said.
They were unlikely to suffer much as manufacturers and distributors would earn between 11 and 21 per cent profit margins respectively, once the price reduction is in place, he said.
"A CD manufacturer personally told me that he could still make profits even if the CDs were sold at 19.90 ringgit per copy," Mr Muhyiddin was quoted as saying by the Star newspaper.
Those who flouted the price controls next year could be fined up to 15,000 ringgit.
"We will review this decision in one year after implementation and if we find that the price control mechanism has managed to revitalise the industry, then we will lift it," he said.
For their part, local film and music producers, distributors and artistes protested the move, saying it would hurt the industry.
Producer Mariana Hashim, who owns A and A Pictures, said the move was a "slap in the face" for local producers, who would have to cut costs by almost half and this would have a domino effect on the entire industry.
"If many small producers have to close their business, production crews will have no jobs and actors too will find it difficult to make a living," she was quoted as saying by the afternoon Malay Mail.
Distribution firm PMP chief executive Danny Liew said it would be impossible to bring in box-office hits and good foreign movies with the fixed price because they have to pay $US100,000 dollars ($150,000) for the rights.
"Now we cannot afford to do so, and simply put, the pirates will have a field day," he said.
The United States has warned Malaysia's move to cut prices of CDs and DVDs could prompt producers to shun the country, even though some of its own companies have recently adopted a similar approach to cope with the problem of internet downloading of music for free.
Market forces would compel producers based in the US, which owns 70 per cent of disc copyrights, to shift to more lucrative markets, as US official claimed earlier this year, adding that the US suffered losses of about $US242 million to piracy in Malaysia in 2002.
A nationwide blitz on piracy this year led to the seizure of some four million discs estimated to be worth over 26 million ringgit between May and August, according to Malaysian official figures.